Judgment

K. RAMASWAMY, J.- The two appeals arise from the same judgment, the first one by the Housing Board and the second by the State, respondents before the Kerala High Court in OP No. 704 of 1982 dated 26-7-1989. The respondent-company had entered into an agreement on 30-5-1977 agreeing that "first party (respondent-company) is satisfied of their own will that on a consideration of all relevant facts and circumstances and the prevailing conditions Rs 1100 (Rupees eleven hundred only) per cent including all improvements situated on this land will be a fair value and proper price for the property". "The first party will accept without protest on their behalf value-compensation at Rs 1100 (Rupees eleven hundred only) per cent inclusive of solatium and value for all structures and improvements on the property to be acquired and referred to in the schedule hereunder", "will not dispute the declaration of compensation awarded". "Entering into this agreement as it will be for his own benefit and he stands to gain by the implementation of the said agreement." The second party (Land Acquisition Collector) "is empowered to make an award" "at the rate of Rs 1100 (Rupees eleven hundred only) per cent inclusive of solatium and value for all structures and improvements in and upon the said land". Pursuant thereto notification under Section 3(1) of the Kerala Land Acquisition Act, 1961 (Act 21 of 1962 for short "the Act") was published in the State Gazette acquiring 2.69.11 hectares in Survey Nos. 1759 part and 1127 parts in Trivandrum for the housing scheme envisaged by the appellants. Possession of the land was taken on 1-2-1978 but since declaration under Section 6 was not published within two years from the date of publication of Section 3(1) notification, on 12-6-1979 fresh notification under Section 3(1) was published. The respondents questioned the notification by filing a writ petition on 10-8-1979 which was disposed of on 13-10-1980 upholding the fresh notification. A declaration under Section 6 was published on 18-1-1981 and a notice under Section 9(3) to make the award was served on the respondents pursuant to which the respondents laid claim at Rs 30,000 per cent for compensation. The District Collector made an award on 21-8-1981 at Rs 1100 per cent and on 19-9-1981 the respondents filed an application under Section 20 for reference to the civil court. Since the reference was not made writ petition OP No. 704 of 1982, came to be filed on 26-1-1982 which as stated earlier was allowed by the High Court under the impugned judgment.

2. The High Court found that the property under acquisition along with other properties, was hypothecated by equitable mortgage to Indian Bank, branch at Trivandrum, which as mortgagee was entitled to claim an interest in compensation payable to the mortgagor. Since the bank was not a party to the contract, no award under Section 16 of the Act could have been made. It also found that, by operation of the proviso to sub-section (1) of Section 16, since four years had elapsed from the date of the agreement, namely, 13-5-1977, the award based on the agreement became void. However, to avoid delay since award had already been made, the High Court directed the Collector to refer the claim under Section 20 to the civil court without reference to the agreement which had become void. Accordingly the writ petition was allowed. Shri R.F. Nariman, the learned Senior Counsel for the Housing Board contended that the view of the High Court is clearly illegal. Section 16 contemplates execution of an agreement between the owner of the land and the Land Acquisition Officer to fix market value at the agreed rate which binds the parties. It is open to the respondents to waive the requirement of entering into a contract by all parties. Even otherwise the respondents had suppressed the fact of hypothecation to have executed an equitable mortgage of the property in favour of the Indian Bank claiming that respondent alone had